Can I move my UK pension into KiwiSaver?
It is one of the questions I am asked most often by clients moving from the UK to New Zealand. The thinking is sensible. You already have a KiwiSaver account, and you want the path of least resistance. Move forward with a minimum of fuss.
The short answer is no. HMRC will not allow it.
Why HMRC does not allow it
UK pension rules are tight. Money inside a UK pension cannot be accessed before age 57. KiwiSaver works differently. There are several situations where a member can withdraw funds earlier, including a first home purchase and significant financial hardship.
Because of that, HMRC has clamped down. UK pension money is not permitted to flow into a standard KiwiSaver account. To accept a transfer from a UK pension, the receiving scheme must be a Qualifying Recognised Overseas Pension Scheme, known as a QROPS. A QROPS keeps the money locked up until age 57, which satisfies HMRC.
The one option that combines the two providers
There is one KiwiSaver provider in New Zealand that also offers a separate scheme set up to receive UK pension transfers. Your KiwiSaver and your transferred pension would still sit in two different accounts, but you would have one provider, one login, and one place to see both balances.
Think of it like having a current account and a savings account at the same bank. Two products, one relationship.
It is convenient, and for some people convenience matters most. It is not the option I usually recommend. In my view there are QROPS available that offer better investment solutions and stronger expected long term returns after fees. So the choice is between convenience on one side and higher expected returns on the other.
What I suggest you do
If you have a UK pension and a KiwiSaver, you should review them both and have a considered strategy for each. They are significant parts of your financial plan and deserve proper consideration.
The real point is what compounds over time. A good UK pension decision, compounded with a good KiwiSaver decision, compounded with twenty plus years of sticking to it, can leave you more than a million dollars better off at retirement on the same amount of input. This can be the difference between a comfortable retirement and an insecure one.
On the pension side, the review covers:
Whether to transfer it to New Zealand at all. For most people we speak to, it is well in their interest to transfer pension to NZ, but for 20-30% of clients, leaving it in the UK is the right answer.
If you do transfer, which QROPS to use.
How the money is then invested inside that scheme.
On the KiwiSaver side, it is worth remembering that there are around 40 KiwiSaver providers in New Zealand. Long term returns after fees vary significantly across them. Going with whichever provider you were defaulted into, or the one offered by your bank, is rarely the strongest choice based on the long run numbers.
Get in touch
If you would like to look at your UK pension and your KiwiSaver together, rather than in isolation, get in touch with us at Windsor Wealth. Compound good decisions over a good period of time and you can expect to be a lot better off in retirement.